FT News Briefing Southern European bond markets make a comeback
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Jun 13, 2025 Tensions heighten as Israel strikes Iran, raising concerns over Middle Eastern stability and oil prices. The U.S. dollar sinks to a three-year low, influenced by tariff negotiations. Meanwhile, Southern Europe sees a surprising bond market rally, with Italy, Spain, and Greece thriving despite underlying economic anxieties. In Argentina, inflation rates drop below 2% for the first time since 2020, showcasing unique economic shifts. Additional drama unfolds with a tragic Boeing 787 crash, complicating the aviation giant's narrative.
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US Dollar Decline Trends
- The US dollar has been declining since January, hitting a three-year low recently.
- Despite this, evidence shows investors are not massively exiting US equities, just slightly reducing Treasury holdings.
Weaker Dollar's Manufacturing Impact
- A weaker dollar can theoretically boost US manufacturing by making domestic production cheaper.
- However, current manufacturing sentiment and export indicators show declines, so benefits are uncertain.
Southern European Bond Rally
- Despite global bond market anxiety, sovereign bonds in Italy, Spain, and Greece are rallying strongly.
- Improved economic growth and EU common debt initiatives have bolstered investor faith in these historically weaker Eurozone borrowers.